Bus&201 Final Study Set Chapter 18
Rick negotiates a bearer instrument to Shane by delivery
without more
A holder who takes a negotiable instrument from a thief cannot become an HDC even if the item was acquired in good faith and there was no reason to be suspicious of the transaction. (T or F)
False
A person can sign an instrument as an authorized agent of the drawer, but the instrument is not negotiable unless the drawer also signs it. (T or F)
False
A promise that states an express condition to payment is negotiable if the condition is stated in writing on the instrument. (T or F)
False
Negotiating bearer instruments requires both indorsement and delivery because the use of bearer instruments involves more risk through loss or theft. (T or F)
False
Raul wants to transfer a check to Schmidt. The check is defective if it
is clearly stamped with "insufficient funds"
Generally, when an indorsement is unauthorized, the burden of loss falls on the first party to take the instrument. (T or F)
True
If the numerical and written amounts on a check differ, the check is payable in the written amount. (T or F)
True
Warranty liability arises in the negotiation of an instrument even when the transferor does not sign it. (T or F)
True
With an order instrument, the payee must be identified with certainty because the transfer of the instrument requires his or her signature. (T or F)
True
A person who transfers an instrument for consideration warrants to all subsequent transferees and holders who take the instrument in good faith that all signatures on the item are authentic and authorized. (T or F)
True
Only the payee's bank can acquire the rights of a holder and negotiate a check indorsed by the payee "For deposit only. (T or F)
True
Coki receives a payroll check from Data Solutions Inc. and indorses it by signing her name on the back of the check. This is
a blank indorsement
Len makes a gift of a check to Millie who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Millie is
an ordinary holder
A consumer who signs a note to buy a defective product continues to be liable on the note to an HDC even if the consumer returns the faulty product to the seller. (T or F)
False
A holder will be deemed to have notice of a defect in an instrument if he or she has reason to know that it exists, given all the facts and circumstances known at the time. (T or F)
True
To be negotiable, if an instrument is not payable on demand, it must be payable at a definite time. (T or F)
True
To operate practically as a substitute for cash or a credit device, a negotiable instrument must be
transferable without the danger of being uncollectable